Ap­ple dis­places Sam­sung on home turf with IPhone

The Pak Banker - - Company& -

SEOUL: For more than a decade, Kim Jung Yeon only bought phones from Sam­sung Elec­tron­ics Co. and LG Elec­tron­ics Inc., pass­ing on best sell­ers made by nonKorean com­pa­nies such as Mo­torola Inc.'s Razr. Her loy­alty ended with Ap­ple Inc.'s iPhone.

"The iPhone has a cool de­sign and I love the feel and grip of the phone," said the 37year-old Web de­signer in Seoul, who bought the de­vice last year, and en­joys us­ing ap­pli­ca­tions about food recipes. "I don't see any rea­son why I should re­turn to LG or Sam­sung phones again if I buy an­other smart­phone."

Sam­sung and LG, the world's two-largest hand­set mak­ers af­ter Nokia Oyj, can no longer count on home-field ad­van­tage as they play catch up in the fastest-grow­ing seg­ment of the $163 bil­lion global in­dus­try.

A year af­ter Ap­ple's phone de­buted in Korea, LG is reel­ing from record phone losses while Sam­sung this week un­veiled the Nexus S phone equipped with Google Inc.'s lat­est An­droid op­er­at­ing sys­tem to win back cus­tomers.

"Korean com­pa­nies are go­ing to face a tough sit­u­a­tion over­seas go­ing for­ward, given how much share they are los­ing at home," said Han Eui Lim, a con­sul­tant at ROA Group Inc. in Seoul. "Es­pe­cially in the case of LG, it's very con­cern­ing."

Sam­sung and LG shares have both un­der­per­formed the bench­mark Kospi In­dex this year. Sam­sung has gained 11 per­cent and LG has de­clined 7.8 per­cent in 2010, com­pared with the in­dex's 16 per­cent gain. Ap­ple shares have surged 51 per­cent, help­ing it over­take Mi­crosoft Corp. as the world's most valu­able technology com­pany. Fewer Car­ri­ers The iPhone, avail­able in Korea only through KT Corp. as op­posed to all of the nation's three wire­less car­ri­ers for Sam­sung and LG, has sold about 1.6 mil­lion units since it went on sale in the coun­try in Novem­ber 2009, ac­cord­ing to KT.

South Korea had about 4.52 mil­lion users of smart­phones-de­vices that can be used to surf the Web, and play games and video-at the end of Septem­ber, with a quar­ter of those be­ing the iPhone, ac­cord­ing to No­mura Hold­ings Inc. an­a­lyst Stan­ley Yang.

The iPhone cre­ated a "mo­bile big bang" by chang­ing the way Kore­ans live and work, ac­cord­ing to Digieco, a re­search di­vi­sion of KT, in a re­port last month.

Espoo, Fin­land-based Nokia is the world's largest maker of mo­bile phones, ac­count­ing for 117.5 mil­lion of the 417.1 mil­lion phones sold world­wide in the third quar­ter, ac­cord­ing to re­search firm Gart­ner Inc. Nokia's share of 28 per­cent was fol­lowed by Sam­sung's 17 per­cent and LG's 6.6 per­cent. Ap­ple was fourth with 3.2 per­cent, Gart­ner said last month.

Among smart­phones, hand­sets us­ing Nokia's Sym­bian soft­ware held mar­ket share of 37 per­cent in the quar­ter, with An­droid surg­ing to 26 per­cent from 3.5 per­cent last year. Ap­ple had 17 per­cent, ac­cord­ing to Gart­ner.

Global hand­set rev­enue is fore­cast to be ap­prox­i­mately $163 bil­lion this year com­pared with $154 bil­lion last year, ac­cord­ing to Credit Suisse Group AG es­ti­mates.

Sam­sung and LG, which are adopt­ing Google's An­droid, may have fallen be­hind in the smart­phone mar­ket be­cause of their ex­ter­nal re­liance on soft­ware, ac­cord­ing to Peter Yu, a Seoul-based an­a­lyst at BNP Paribas SA.

"The iPhone and smart­phones in gen­eral are mostly about soft­ware con­tent-it's more of a cul­tural prod­uct," said Yu, who has a "re­duce" rat­ing on LG. "When the iPhone was in­tro­duced, the Korean com­pa­nies were in a state of de­nial, they un­der­es­ti­mated the po­ten­tial."

LG re­placed its chief ex­ec­u­tive of­fi­cer and head of the hand­set-mak­ing di­vi­sion in Oc­to­ber af­ter the mo­bile­phone busi­ness posted record losses for two con­sec­u­tive quar­ters. -Bloomberg

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